Demand still lacking despite urgent need for storage facilities

Despite an urgent need for storage facilities across Myanmar, there are still numerous empty warehouses at vacated industrial sites. At the same time, outdated regulations prohibiting construction of modern warehouses at industrial zones should be reformed immediately, said U Aye Thaung, chair of Shwe Lin Ban industrial zone.

“In other countries, services that support the main industrial, agriculture and manufacturing sectors such as logistics, distribution and marketing are given top priority. But in Myanmar, many warehouses are left vacant and the support services sector is still not developed,” he said.

That has to change in order for the economy to expand further.

In Yangon, most warehouses are located inconveniently far away from the industrial zones, which adds to transport and logistics costs. Currently, warehouse facilities are usually leased in Shwepyitha, Dagon Seikkan, Hlaingthaya and Thaketa townships in Yangon.

“When leasing a warehouse, the location is important. For example, it is very convenient for CityMart in Thaketa to have a warehouse within the same area,” said U Nay Lin Zin, joint secretary of the Myanmar Rice Federation.

“However, the government still lacks an understanding of the logistics supply chain and facilities needed to support industrial development,” he said.

It isn’t just the industrial zones that require warehouse support. “Warehouses are essential for agriculture, livestock and consumer goods,” said U Nay Lin Zin.

Lack of demand

Although small or older warehouses are easily available in the market, there is a lack of modern, international-standard facilities in the country. Yet, the warehouse business in Myanmar has not prospered and a functional warehouse rental service needs to be developed, said U Nay Lin Zin.

“When compared to online searchers for other buildings on real estate websites, warehouse are less than 5 percent of the total number of searches conducted,” said U Nay Min Thu, managing director of iMyanmarHouse.com.

One reason is that currently, many businesses still use apartments or offices as a substitute for warehouse space. “There are many who rent flats close to their workplaces to store goods and the minimum price is K5 lakh a month,” U Nay Min Thu said.

Existing warehouse facilities can be leased for a period of one month up to 30 years. Rental prices vary from K300 to K600 per one square foot per month depending on security, electricity supply, temperature and location.

“The rate can be as low as K150 to K200 per square foot per month if the warehouse is located in remote and difficult-to-access areas like Dagon Seikkan township,” U Aye Thaung said.

“There are also instances where some just lease the land as they can’t afford to construct the warehouse. After leasing for five years, they may build their own facilities if it is convenient for both sides,” U Aye Thaung said.

Lease rates differ depending on the items. The rates are cheaper for cosmetics and canned foods, which can be easily moved and stored. However, it gets more expensive to store chemical fertilisers or heavy-duty construction materials.

Still, with more foreign logistics companies entering the market, local businesses are starting to take note. Just last week, U Ye Min Aung, vice chair of The Republic of Union of Myanmar Federation of Chamber of Commerce and Industries, during a meeting with the vice president said there is a need to fulfil the requirements for constructing good quality warehouses in the country.

“Businesses across the economy need storage facilities for all sorts of material from bathroom ware, construction materials, rice and beans. Once this component of the economic supply chain is fixed, it will hugely support economic growth in Myanmar,” said U Nay Lin Zin.

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